Haywood likely to hike room tax, change tourism board make-up

A proposed 1-cent increase in Haywood County’s tax on overnight lodging and a completely new make-up of its tourism board will likely be approved during this session of the General Assembly.

The draft of a proposed bill has been circulating throughout the county for a couple of weeks, and county commission Chairman Larry Ammons said in all likelihood the bill will go to the General Assembly with only minor changes.

“We will tell our representative these concerns, particularly about the board make-up, and see how he feels about introducing it,” Ammons said a public hearing attended by about 35 people last week.

“This is probably it as far as public input,” Ammons said as the meeting concluded.

The bill, as written, would add 1 cent to Haywood County’s 3-cent tax on overnight lodging. The $650,000 it generates is used by the Tourism Development Authority to promote tourism. The extra cent — roughly $215,000 — would be divided among the different zip codes for expenses that still would have to approved by the TDA.

The most important question left unanswered after last week’s public meeting is the new make-up of the Tourism Development Authority. If the bill is approved, the current TDA would be disbanded in July and a new one appointed.

According to the draft, the new TDA would consist of two from small lodging businesses, one from large lodging businesses, two from tourism-related businesses and four more members who would be appointed by the county’s four municipalities — Maggie Valley, Waynesville, Canton and Clyde — for a total of nine.

“There is a standard of board membership in Raleigh of nine, and so that is what we have here,” said Ammons.

However, he also said the board may tweak the make-up. Some argued that the lodging industry is not adequately represented on the TDA board under the new proposal, or that not enough large lodging businesses would have a voice.

“Having only one voice for large properties is a concern,” said TDA board member Alice Aumen. “It’s not fair to be overly represented by small lodging owners.”

Bed and breakfast owner Sandy Wright said she wanted to take a vote on a proposed change that would only allow lodging owners on the TDA. She argued that since they pay the tax, they should decide how it’s spent.

Ammons questioned that logic: “You don’t think Ghost Town folks should be on the TDA board?”

At this point it’s unclear how the board make-up might change, but at one point in the meeting a proposal came up to increase the number of seats on the board and allocate two seats each to small and large lodging business owners.

Big differences

There are a few striking differences between the bill in Raleigh and the bill the county commissioners wanted. For starters, the county commissioners wanted to tap into tourism tax revenue to fund recreation — from soccer complexes to greenways. They wanted a 1-cent increase in the room tax that could be reserved for recreation projects. Their theory: recreation amenities would not only make the area more attractive to tourists and part-time residents but would help land big youth tournaments that can bring hundreds of families into the county for a weekend.

The county isn’t asking for the 1-cent increase for recreation in the proposed bill after all. Legislators say it would be too hard to get passed in Raleigh. That suits some in the tourism industry, who were skeptical about the county trying to get its hands on the tourism tax revenue.

Different uses for money

The bill will open the door for more flexible uses of tourism tax revenue. Before, tourism tax revenue had to be spent on tourism promotion — strictly interpreted as advertising and promotions with a direct hand in reeling in tourists.

The new law will allow up to one-third of the money to be spent on “tourism-related expenditures” allowing for some much more liberal uses of the money. Under the old rule, money for a festival could only be spent advertising that festival —not hiring entertainment or renting a stage. Under the new rule, money can be used to cover the hard costs of actually putting on the festival.

Under the old rule, money to install lights at the Maggie Festival Grounds would have been a stretch. While lights would certainly benefit events at the festival grounds, which in turn attract more people, putting in lights didn’t exactly qualify under a strict definition of tourism promotion. Under the new rule, lights could be considered a tourism-related expense.

The county commissioners’ greenways and ball fields could also be considered a tourism-related expense. But the county will be hard pressed to tap into the funds directly. The bill specifically gives the tourism board the authority to dole out money for tourism-related expenditures — or not.

“This would be based on the judgment of the Tourism Development Authority,” said Scotty Ellis, executive director of the TDA, while going over the ins-and-outs of the bill at a meeting of the tourism board.

That once again appeased some in the tourism industry who were concerned about losing control over how tourism revenue was spent and seeing it taken over by the county.

New division

Historically, the tourism board reserved a portion of the tourism tax money for geographic areas within the county. In recent years, the tourism board moved away further and further away from that approach and put more money into countywide marketing strategies. The tourism communities in Waynesville, Maggie and Canton got less and less to spend on their own special projects.

This bill will mandate that 1 cent of the room tax — about $220,000 — be reserved for special projects in five geographic areas defined by zip codes: Maggie Valley, Waynesville, Lake Junaluska, Canton and Clyde. The money will be divided up according to the amount collected in each zip code, which means Maggie Valley and Waynesville will get the lion’s share.

“It has been a long time coming for the areas not to have to come and beg before this board for money,” said James Carver, tourism board member and Maggie Valley restaurant owner.

The reasoning: each geographic area has its own special tourism marketing needs and niches that aren’t addressed in a countywide tourism strategy.

The bill doesn’t exactly equate to blank checks for the five geographic areas to use as they please, however. The TDA will have the final say on what projects in each area do or don’t get the money.

The bill requires the tourism board to make its decisions based on “recommendations from and in consultation” with each of the five geographic areas, but doesn’t spell out how to do so, leaving the tourism board a bit puzzled.

“It doesn’t say how to do it, it just says in consultation with each of the five collection areas,” Ellis said at a recent TDA meeting.

One tourism board member questioned the idea of divvying the money up according to where it was collected. Instead, why not just have the extra cent go into one big pot to fund special projects regardless of their geographic area?

“The 1 percent should be left for all festivals and events in Haywood County and leave it up to us to divvy up,” suggested Tom Halsey, a tourism board member.

It is difficult to determine whether any given tourist staying in Maggie Valley, for example, came there specifically to see Maggie, or whether they came to see and do a host of things in the county and simply stayed in Maggie because that’s where they could find a room. Under the funding formula, however, Maggie would get credit for any tourist that stays in Maggie — chalking up a share of that tourist’s tax revenue simply because that’s where the tourist laid their head.

Halsey questioned the formula, which rewards Maggie greatly at the expense of Canton and Clyde, where projects will likely go unfunded it restricted to by percentage.

“That’s disparate distribution,” Halsey said. “Our mantra here is promoting Haywood County. It could be that Canton one year has all these great festivals we want to fund but we would be prevented from it.”

At a public meeting to discuss the proposed bill, Maggie Valley Mayor Roger McElroy said, “We’re happy with the proposed bill, very happy with it.”

In all likelihood, there wouldn’t be a bill at all if it weren’t for the vocal complaints from the Maggie tourism community after the tourism board sharply cut funding for special projects last year. Maggie lost a significant portion of its operating budget for the Maggie Chamber and for festivals. The Maggie tourism community took their complaints to the county commissioners, who in turn appointed a task force, which in turn recommended a one-cent increase for special projects in geographic areas.